Pretax income is one of the most important numbers to understand if you earn on platforms like OnlyFans. Whether you’re just starting out or already generating a steady monthly income, knowing how to calculate pretax income helps you track your financial performance, prepare for taxes, and grow your business responsibly. In this article, we’ll explain what pretax income means, why it matters, and how to use it to run a more profitable and sustainable content business.
What Is Pretax Income?
It is the amount of money you earn before paying income taxes. It reflects your business income after accounting for all operating expenses, interest, depreciation, and other deductions, but it does not include taxes.
For OnlyFans creators, pretax income is left over from your gross profit once you’ve paid for everything you need to run your account, such as props, software, rent, marketing, and Wi-Fi, before paying any federal, state, or self-employment tax.
This figure is sometimes called:
- Earnings before tax
- Earnings before income taxes
- Income before tax
Understanding pretax income gives you a more accurate picture of your overall financial performance and helps ensure you don’t fall short when it’s time to pay taxes.
Why Understanding Pretax Income Matters
Pretax income tells you whether your OnlyFans account is profitable. It’s a critical number in any income statement and shows the earnings from your exclusive content before the government takes its share.
For creators, this metric matters because it:
- Helps determine your self-employment income
- Tells you how much to set aside for quarterly taxes
- Affects your eligibility for tax deductions and tax credits
- Reflects your business performance more clearly than just looking at gross sales
- Helps track your progress from month to month
Companies use this same number to report a company’s pre-tax income and evaluate company profitability. The idea is the same whether you’re managing a team of employees or running a solo content brand. The stronger your pretax earnings margin, the more financially stable your business is.
How to Calculate Pretax Income (Step-by-Step Guide)
To calculate pretax income, use the following formula:
Pretax income equals total revenue minus cost of goods sold, operating expenses, depreciation, and interest expenses.
Let’s break that down.
Step 1: Add up your revenue
This includes all money you earned from:
- Subscription sales
- Pay-per-view content
- Tips
- Custom requests
- Exclusive content access
If your total sales were $8,000 this month, that’s your starting point.
Step 2: Subtract cost of goods sold (COGS)
This covers the direct costs of producing your content. It could include:
- Props and outfits
- Software tools
- Filming or editing gear
- Lighting
Example: COGS equals $1,000
Step 3: Subtract your operating expenses
Your operating income is what remains after you deduct recurring monthly expenses like:
- Wi-Fi and utilities
- Rent (or home office deduction)
- Paid shoutouts
- Subscriptions to editing platforms
Example: Operating expenses equal $1,200
Step 4: Subtract depreciation and interest expenses
These are longer-term costs for gear or loans. For instance:
- Depreciation on a new camera
- Interest on credit card debt related to your business
Example: Depreciation and interest expenses equal $300
Final Calculation:
Pretax income equals $8,000 minus $2,500, which equals $5,500
This number is your pretax earnings and the starting point for calculating how much tax you’ll owe.
Pretax Income vs Net Income: What’s the Difference?
It’s easy to confuse pretax income and net income, but they’re not the same.
| Term | What It Means | Includes Taxes? |
|---|---|---|
| Pretax Income | Earnings after expenses, before taxes | No |
| Net Income | Earnings after all taxes are paid | Yes |
Your net earnings are what actually land in your bank account. Pretax income is what tax professionals and the IRS care about when preparing your return.
Knowing the difference helps with better tax planning, more accurate budgeting, and even long-term savings.
Tax Considerations for OnlyFans Creators
If you’re self-employed, understanding your tax considerations is just as important as producing content. Your pretax income directly affects what you owe on:
- Self-employment tax
- Federal income taxes
- State taxes, if applicable
Pretax income is also the baseline for determining which tax credits and deductions you may qualify for.
Here’s what you need to know:
- You’ll need to pay quarterly taxes if you earn more than $1,000 in net income
- Deductions like gear or home office use lower your taxable income
- Using accounting software or working with a tax advisor helps you stay compliant with tax codes
Reminder: You are taxed on your self-employment income, not just what gets deposited in your bank account. That’s why tracking pretax income is critical.
What Affects Your Pretax Income?
There are many factors that can increase or decrease your pretax income over time. As an OnlyFans creator, here are some examples to monitor:
Income-Boosting Factors:
- Increased subscriber count or tips
- Offering high-ticket content bundles
- Selling digital products alongside your OnlyFans account
Expense-Heavy Items That Reduce Pretax Income:
- Studio rent or utilities
- Ad spending or promotions
- New gear like a camera or mic
- Travel expenses for content creation
- Maintenance costs for physical equipment
Each business decision has an impact on your earnings, expenses, and ultimately your pretax earnings margin.
Example: Comparing Company ABC to an OnlyFans Creator
| Category | Company ABC | OnlyFans Creator |
|---|---|---|
| Revenue | $500,000 per fiscal year | $96,000 per fiscal year |
| COGS | $200,000 | $18,000 |
| Operating Expenses | $100,000 | $20,000 |
| Depreciation | $15,000 | $2,000 |
| Pretax Income | $185,000 | $56,000 |
Even though Company ABC is a larger operation, the pretax income formula is exactly the same. The main difference lies in the type of deductions, tax rates, interest income, or regulatory fines that may apply to larger corporations under corporate taxes.
Common Deductions That Affect Pretax Income
Here are common deductions that can reduce your taxable income:
- Home office deduction
- Editing software subscriptions
- Paid promotions
- Ring lights, tripods, backdrops
- Health insurance premiums, if self-employed
- Professional services like legal or accounting
- Travel costs for filming content
Every dollar you deduct lowers your pretax income, which in turn reduces your tax expense.
Keeping track of these helps boost your company’s financial performance, even if you’re a one-person content brand.
How Pretax Income Impacts Your Taxes
Pretax income determines how much you’ll owe across multiple levels:
- Federal level
- State level, if applicable
- Self-employment taxes for Social Security and Medicare
Your tax bracket is based on your taxable income, which starts with your pretax income and adjusts for write-offs and credits.
Knowing how your earnings, sales, and expenses flow into this number gives you more control over:
- How much to set aside monthly
- Whether you qualify for tax write offs
- When it’s time to upgrade your gear or scale your business
Conclusion
Pretax income helps you take control of your OnlyFans business. It’s not just a number for your taxes, it’s how you measure what you’re really making, plan ahead, and stay in the green.
Understanding pretax income also helps you know when to reinvest in your content, when to save for tax season, and how to make your business more profitable over time.
Your path to complete financial prosperity begins now. To master the art of tax planning and transform your future financial outlook at tax time, contact The OnlyFans Accountant for a free consultation. Want to learn how to maximize deductions, track expenses like a pro, save more, and navigate tax season like a boss? Get your FREE copy of our eBook.
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FAQs
What is the pretax income?
Pretax income is the amount you earn before paying income taxes. It’s calculated by subtracting all business expenses (excluding taxes) from your OnlyFans revenue. This number helps you estimate taxes and see how profitable your content business is.
How to calculate pretax profit?
Start with your total revenue from OnlyFans. Subtract any production or business expenses like equipment, Wi-Fi, platform fees, and software. The result is your pretax profit. Don’t subtract taxes yet those come after.
How to calculate earnings before tax?
Earnings before tax is another term for pretax income. Use this formula: Revenue minus business expenses (except taxes). If you use a spreadsheet or accounting tool, this number will usually appear before your estimated tax line.
What is a permanent difference between taxable and pretax income?
A permanent difference is when something shows up in your accounting books but doesn’t count for tax purposes. For example, fines or gifts might reduce your pretax income but not your taxable income because they aren’t tax-deductible.
What is the pretax income?
Pretax income is the amount you earn before paying income taxes. It’s calculated by subtracting all business expenses (excluding taxes) from your OnlyFans revenue. This number helps you estimate taxes and see how profitable your content business is.
How to calculate pretax profit?
Start with your total revenue from OnlyFans. Subtract any production or business expenses like equipment, Wi-Fi, platform fees, and software. The result is your pretax profit. Don’t subtract taxes yet those come after.
How to calculate earnings before tax?
Earnings before tax is another term for pretax income. Use this formula: Revenue minus business expenses (except taxes). If you use a spreadsheet or accounting tool, this number will usually appear before your estimated tax line.
What is a permanent difference between taxable and pretax income?
A permanent difference is when something shows up in your accounting books but doesn’t count for tax purposes. For example, fines or gifts might reduce your pretax income but not your taxable income because they aren’t tax-deductible.